Real estate media company Zillow is upgrading its flagship home valuation feature, the Zestimate, saying it has been able to reduce its national median error rate to 6 percent from 8 percent, and improve accuracy in 96 of the country’s 100 largest counties.
In some cities, the accuracy will improve further. For example, in Zillow’s hometown of Seattle, the company says the median error rate will drop to 5 percent, from 7 percent previously.
The company says the update, to be rolled out starting today, allows the Zestimate to more accurately value newly constructed homes and avoid being thrown off by “outlier” home sales in a given neighborhood, while adding computing power and giving Zillow the ability to process more home value data faster than in the past.
Overall, the company says the new approach is better at analyzing a home’s specific attributes and more sophisticated in deciding which mathematical model to use in determining a home’s Zestimate.
The Zestimate is a lightning rod, bringing valuable attention to Zillow but also stirring controversy among some homeowners who contend that it doesn’t accurately value their properties. The latest fuel on that fire was the sale of Zillow CEO Spencer Rascoff’s former home for 40 percent less than its Zestimate of $1.75 million.
Online real estate brokerage Redfin last year launched its own home valuation tool, promising more accuracy than the Zestimate with a margin of error of 2 percent on homes listed for sale, and 6 percent for homes that are not.
Zillow says its new 6 percent median error rate means that half of all Zestimates will be within 6 percent of the ultimate selling price, and half will be off by more than 6 percent. The company reiterated that the Zestimate is a “starting point” for determining home value.
“Since we launched the Zestimate 10 years ago, we have been continually working on making it even better,” said Stan Humphries, Zillow Group chief analytics officer and creator of the Zestimate, in a news release. “With the additional statistical models and computing power behind today’s update, we are able to provide consumers even better information about millions of homes, equipping them to make informed decisions when talking with a real estate professional about buying or selling.”
The company says the updated Zestimate will roll out over the next 24 hours, but most homeowners won’t see a major change. The company reports the accuracy of the Zestimate at the county level.